Payam Shohadai, the cofounder of visual effects firm Luma Pictures, is hesitant to speak about the company’s yacht. Luma doesn’t even have it anymore, he hastens to say, having offloaded it after a group of Luma partiers partially flooded the thing and it became a hassle to maintain. And besides, protests Shohadai quietly, the boat was so small, it just barely fit the definition of "yacht." Do I really have to mention the yacht at all? Because the thing is, he explains, the visual effects industry is hurting right now, and Shohadai doesn’t want to come across as outright gloating about his company’s robust bottom line.
Indeed, a spate of headlines over the last few months have called visual effects an industry in "crisis" (it’s a word used by Variety, Entertainment Weekly, and others). It’s a climate in which critical and commercial success are not mutually assured; in a grand irony, Rhythm & Hues, a renowned studio, was forced to declare bankruptcy—and then won an Oscar, for its work on Life of Pi.
"It’s a really troubled industry," says Shohadai. "It’s forced me for a while now to think why we are not having the same troubles." Why indeed does an Oscar-winning VFX house go under, while Luma has cash to burn on a yacht (even if it’s "barely" a yacht)?
The answer may go back to the inception of the company. Shohadai, now 41, never thought of himself as a businessman. For as long as he could remember, he was a musician. In the '90s, with the Internet ascendant, Shohadai decided he would produce and distribute his own music—he'd have a smaller audience, but a larger cut of all sales. He bought some audio equipment. When a visual artist friend hit some hard times, Shohadai bought some VFX equipment too, and encouraged his friend to learn how to use it. A family matter then compelled the friend to move away, and Shohadai found himself sitting on a massive investment of hardware and software.
"I always viewed myself as invincible, so I thought I’d learn this thing. For six months that’s all I did, was just live and breathe this stuff." He learned it all: modeling, sculpting, texturing, painting, animating. Soon he got assignments—high-paying ones, and more than he could handle alone. He took on employees to cover that work, always with an eye on getting back to his music eventually. "A large portion of why I was never super serious about being a businessman was that I always had one foot out, thinking I’d get back to music once I paid off my loan," he said. "But then I had employees to care about. I never wanted to let them down."
And that appears to be one big key to Shohadai’s success: actually, deeply caring about his employees. Visual effects is largely a project-based industry; many firms will hire a phalanx of freelancers to toil on the next superhero movie, work them to the bone, then let them go when the project is done. Shohadai’s approach has always been the exact opposite: Hire quality people, and hold on to them forever.
"It’s typically a very nomadic industry," says Shohadai. And while hiring temps and freelancers might make business sense on a superficial level, he says, "I think if you’re trying to think of the long term, you have to try to find the best people out there—the very best people you can find. If you invest in a team, it can be inadvertently better for the bottom line. That’s what we’re finding out," he says.
Relentlessly hiring top talent, then treating that talent extremely well—on paper in sounds great. In practice, it means a few decisions that might raises eyebrows in a Business 101 lecture. For instance, in slow seasons, there are employees at Luma that simply don’t have much to work on. Yet Luma keeps those people on as full-time employees through the slump. "When we’re at our best, we use those moments to cross-train people so they’re more broadly effective in different portions of the business cycle," says Shohadai. But if he’s being honest, there’s also "a lot of ping-pong, pool, and video games during those periods."
He’s never laid off anyone just because business was slow. "The worst thing I ever did was I cut five hours out of the work week for four or five weeks," roughly five years ago, around the time of the Writer's Guild strike, he recalls. He even called the company into the screening room to make sure everyone was okay with it. Most were just overjoyed not to be laid off, since that was often what was happening to friends in other companies. "Our industry is burning right now," says Shohadai. "But people feel weirdly secure here."
As Luma grew, Shohadai felt strongly about keeping an intimate company culture. He arbitrarily set a limit of 50 employees. Just in the past year, reluctantly, he has decided to let the company grow further. He now has around 100 employees in the U.S. and 50 in Australia. He simply found that Luma—which has worked on many big titles, including most of the Coen brothers’ recent films, Oz: The Great and Powerful, and the forthcoming Iron Man 3—was missing out on certain choice bids, for lack of manpower. The company is now trying to "responsibly grow to a size that can handle the volume for the most choice sequences," says Shohadai. Just in the past year, he explains, "we started caring about actually growing the company—things actual business owners care about."
But it was ignoring those things until they could no longer be ignored that served Luma well, while it built a reputation as a reliable boutique facility for quality work. "I say I was never that serious about the business, but I was always serious about the quality of the work, and about treating employees well," says Shohadai. "There’s a sort of putting the horse before the cart that goes on at Luma." Shohadai always focused on the work and the people, rather than revenue.
And then he looked up one day and saw that, much to his embarrassment, he could afford a yacht. But let's not get into that.
[Images Courtesy of Luma Pictures Studio]